WASHINGTON, D.C.—Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued the following statement in connection with Better Markets’ new Fact Sheet, “The SEC Must Make Markets Work for Investors”:
“Tomorrow, the SEC will hold a roundtable to discuss its ‘Trade-through Rule,’ which prohibits the execution of trades on one exchange at prices inferior to prices at another exchange. Although the Trade-through Rule stemmed from laudable goals, it has had unintended consequences that have transformed the markets in a way that harms investors.
“As Joe Saluzzi, partner and co-founder at Themis Trading and one of the participants at the upcoming roundtable recently noted, the Trade-through Rule contributed to the rise of high-frequency traders (HFTs). These HFTs, aided and abetted by stock exchanges, now dominate our markets. This is the situation the SEC must address at its roundtable.
“Our new fact sheet explains how the Trade-through Rule caused this situation, why HFT strategies are so pernicious, and how stock exchanges profit from HFTs at the expense of ordinary investors. Our fact sheet also explains what the SEC should do—specifically, by recommending that the SEC implement a central order limit book. Although the exchanges have opposed a central order limit book previously, and HFTs would surely do so today, we hope that as the SEC considers these issues it will put the interest of ordinary investors first.”
The fact sheet is available online here.
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
